Spruikers take advantage of the Rental Affordability Scheme

TODAY I want to discuss the National Rental Affordability Scheme (NRAS) - an initiative of the Rudd government to provide low-cost housing to people on low incomes.

Unfortunately property spruikers have got into this area and some of them have formed alliances with developers, often adding a secret commission of $40,000 or more for themselves.

I have a file on my desk that was sent to me by one of the victims. It started off with a cold call asking them if they would like to save tax, and ended up with them buying an NRAS unit at the Gold Coast. They were pushed so hard that they didn't take the time to do their homework. Now they find to their horror that it's worth at least $60,000 less than they paid for it.

They also produced documents, which they managed to extract from the "adviser" after considerable pressure - they prove a secret commission of $43,000 was paid to the person who was supposed to be advising them.

By all means invest in property if property is that is your "thing'' but remember the secret of success in real estate is to ferret around till you find an undervalued property in a prime location that you can buy at a bargain price because the vendor has a reason to sell in a hurry. It's hard to see an NRAS property ever satisfying that criteria.

Let me finish by restating two basic investment fundamentals. First, if you ever get a cold call asking you to make an investment, hang up at once - you can bet that the call is for the benefit of the person on the other end of the phone not you. Second, you should only undertake an investment on the strength of the investment itself, any tax benefits that go with it should be treated as the cream on the cake.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.